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Sen. Coleman proposes bill to combat foreclosures

Sen. Norm Coleman has proposed legislation
that would let homeowners who are late on their mortgage payments
withdraw money penalty-free from their retirement accounts to avoid
foreclosure.

Coleman's bill comes amid the housing industry's steepest
downturn in 16 years and a rising wave of foreclosures.

It would allow people who are 60 days late in their payments to
withdraw up to $100,000 from retirement accounts -- such as an IRA
or 401(k). They could do that without paying the 10 percent
penalty, through 2009.

There would be no income tax as long as the withdrawals are paid
back within three years. It would be limited to borrowers making no
more than $114,000, or $166,000 for joint filers.

People can already borrow against a 401(k), but Coleman says his
bill would exempt repayments from interest.